Correlation Between Digital China and Neo Neon
Can any of the company-specific risk be diversified away by investing in both Digital China and Neo Neon at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Digital China and Neo Neon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital China Holdings and Neo Neon Holdings Limited, you can compare the effects of market volatilities on Digital China and Neo Neon and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Digital China with a short position of Neo Neon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital China and Neo Neon.
Diversification Opportunities for Digital China and Neo Neon
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Digital and Neo is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Digital China Holdings and Neo Neon Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Neon Holdings and Digital China is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Digital China Holdings are associated (or correlated) with Neo Neon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Neon Holdings has no effect on the direction of Digital China i.e., Digital China and Neo Neon go up and down completely randomly.
Pair Corralation between Digital China and Neo Neon
Assuming the 90 days trading horizon Digital China Holdings is expected to generate 2.42 times more return on investment than Neo Neon. However, Digital China is 2.42 times more volatile than Neo Neon Holdings Limited. It trades about 0.36 of its potential returns per unit of risk. Neo Neon Holdings Limited is currently generating about 0.01 per unit of risk. If you would invest 568.00 in Digital China Holdings on September 4, 2024 and sell it today you would earn a total of 167.00 from holding Digital China Holdings or generate 29.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital China Holdings vs. Neo Neon Holdings Limited
Performance |
| Timeline |
| Digital China Holdings |
| Neo Neon Holdings |
Digital China and Neo Neon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital China and Neo Neon
The main advantage of trading using opposite Digital China and Neo Neon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital China position performs unexpectedly, Neo Neon can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Neo Neon will offset losses from the drop in Neo Neon's long position.| Digital China vs. Ju Teng International | Digital China vs. Neo Neon Holdings Limited | Digital China vs. Medtecs International | Digital China vs. Vietnam Manufacturing and |
| Neo Neon vs. Hon Hai Precision | Neo Neon vs. Delta Electronics | Neo Neon vs. LARGAN Precision Co | Neo Neon vs. AU Optronics |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |